Ed Zander, the chairman and chief executive of Motorola, has fallen victim to the handset maker’s recent 94 per cent fall in quarterly profits and said yesterday that he will relinquish both of his roles within six months.

Mr Zander steps down as chief executive in January and will resign as chairman at the annual meeting in May. He will continue to act as an adviser until January 2009, on the same salary and benefits. In a filing with the Securities and Exchange Commission, the company said he will not be eligible for next year’s bonus.

Pressure on Mr Zander intensified at the start of this year when he narrowly managed to fight off the billionaire corporate raider Carl Icahn, who wanted a change of management at Motorola. Mr Icahn said in a statement that the changes revealed yesterday were not enough to address “major problems” at the company.

Motorola started running into trouble two years ago when it lost market share to Nokia and Samsung, the now bigger mobile phone handset makers. The company admitted that it had tried to maintain its market share by cutting prices, which had hit profitability.

In October, Motorola reported a 94 per cent fall in overall third-quarter profits. It said that within its mobile handset operations – the biggest part of its business - sales for the same period were down by more than a third, resulting in a loss of $138 million (£67 million).

Mr Zander, a former senior executive at Sun Microsystems, joined Motorola in 2004 and was responsible for launching the highly successful Razr phone. But successive models failed to make as big an impression and Motorola began to lose out. The share price is now 40 per cent lower than the levels it enjoyed just a year ago.

One telecoms insider said: “Ultimately, it’s a cultural thing. Zander tried to change the very unwieldy, old-school culture of Motorola. He was a Silicon Valley guy who was sharper and more aggressive than the Motorola old guard. They didn’t want that.”

Motorola has promoted Greg Brown, chief operating officer, to replace Mr Zander as chief executive. There was no announcement yesterday of a replacement chairman. The shares gained 32 cents to $15.97.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax